Peter Bennett is not your average property surveyor. Not only does he run a portfolio of 300 real estate assets valued at about £2 billion, but he also plays a crucial role in helping the City of London protect its reputation as a leading global business and financial services centre.

Peter Bennett

Bennett became head of property for the City of London Corporation, the local body that runs the financial district commonly known as the Square Mile, when he was appointed the 34th City Surveyor in 2006. He oversees more than 300 investment properties owned by the Corporation – the income from that helps fund the City’s local authority activities – and 600 operational properties, including wholesale markets, police stations, offices, car parks and schools in London and south-east England.

The Yorkshire-born Bennett also acts as a City troubleshooter to ensure leading financial services firms stay within the City’s borders. So, when Goldman Sachs faced an unusual problem in late 2011 that put its planning consent for an 844,000 sq ft office scheme by Farringdon Street at risk, it was Bennett’s team that stepped in to “pull some levers”.

Nine tiled panels on a former telephone exchange that Goldman Sachs wanted to demolish for its redevelopment had been given Grade II listed status by the government, potentially threatening Goldman Sachs’ plans. Bennett’s department helped convince English Heritage that the 1960s tiles could be moved to the Barbican, where they are now housed.

Bennett said: “Of course it costs quite a lot of money to do that, and takes a lot of time and effort. But it was quite an essential requirement for Goldman.”

Keeping one of the best known investment banking names within the City remains important to the Corporation – particularly after JP Morgan moved its European headquarters to Canary Wharf in 2012, and after several US and European banks relocated to the Docklands estate in the 1990s and 2000s.
Nonetheless, the Corporation has had to adjust to a post-2008 landscape where large investment banks are no longer as significant to its reputation as a business hub.

More than finance

Even Bennett plays down the idea that the City is just about banks and fund managers. He said: “The majority of occupiers in the City are no longer financial institutions.

“We did a report last year which showed two interesting things – one, that the majority of the businesses in the City are not financial services and also the vast majority of businesses in the City are small.”

The report was carried out by Ramidus Consulting, which found that 52% of occupiers in the City are in units of less than 5,000 sq ft while 72% of all occupiers are in units of less than 10,000 sq ft.

Part of the reason for this is the growth of technology firms on the fringes of the City, while large investment banks have retrenched and consolidated space. According to property consultant Knight Frank, financial services firms accounted for 14% of take-up of office space in central London in 2013, compared with a peak of 36% in 2010. Meanwhile, the telecommunications media and technology sector accounted for 30% of take-up last year, up from 15% in 2010.

That’s not to say the Corporation has turned its back on what has historically been its core residents.
Bennett said: “The City is still very much a financial services centre and, of course, the major banks are a big part of what we’re about. The clustering of them is important and we do need to meet their needs.”

Bennett, for example, has over the years kept in contact with Deutsche Bank, which is based in several buildings in the Square Mile around Winchester Street, about its long-term plans. Property consultants have long predicted that the German bank will at some point commit to relocate London staff into a new headquarters, although it has been more focused in recent years on reducing the number of offices it occupies.

While investment banks have not been active leasing new office space, Bennett, who joined the Corporation in 1990, is more optimistic that the long-term health of the property market is recovering as non-investment banking tenants look for new space. Having fallen to below £40 per sq ft after 2008, “rents are shifting” upwards to £50-£55 per sq ft on highest-quality space.

Bennett said: “In the last six months or so, we have suddenly seen the occupier market take off in the City and surrounding areas and demand coming through like it hasn’t done for quite some time.”

Follow the rents

As his main role is overseeing the Corporation’s property portfolio, split between three funds – the City Fund, the City’s Cash fund and Bridge House Estates (see box) – Bennett has a keen interest in where rents are going and the revenues they generate. But the City of London’s top surveyor must also think strategically about the long-term interests of the City of London as a financial and business centre.

This has meant earmarking for long-term expansion new sites in and outside the City. This has led to involvement with more small and medium-sized enterprises and the burgeoning technology sector in the Old Street and Shoreditch area. From 2000, the Corporation started acquiring properties on two acres of land fronting Shoreditch High Street and Norton Folgate. In August, it sold the site to British Land, which has the opportunity to develop about 320,000 sq ft of mixed-use space.

“That was a classic example of where we’ve been buying in the City fringe, the Tech City area as it’s now called. We took a strategic decision to buy [the] sites – first of all to stop them going on a piecemeal development, secondly to allow SME space in the short term, but thirdly to provide long-term redevelopment space on a more comprehensive basis.”

Bennett says it is compatible to seek strong returns for its funds while also acting as a strategic investor for the City’s future. But he says it is more difficult to find fair value in an “income stream”, or properties that are let to tenants with strong covenants, which have attracted so much demand from foreign investors seeking safe havens.

“Now is not really the time to [buy those properties] because the market is so hot with money. You probably end up paying over the odds if you are not careful.”

So the Corporation is instead looking to spruce up its own assets to carry out “more hands-on asset management of the assets that we’ve got”. It is refurbishing the 80,000 sq ft Guildhall House in the City and a collection of offices let to law firms in the Whitefriars area; and it is in a joint venture with developer Quadrant Estates on the construction of a 100,000 sq ft office and retail scheme on 100 Cheapside, due for mid-2015. It is also planning a redevelopment of Fleet Bank House, which it bought near the bottom of the market in 2008.

Bennett said: “The real answer at the moment, and this is the direction we are definitely moving in, is putting [investment] into refurbishment and redevelopments.”

The many roles of the City of London Corporation

The City of London Corporation is an ancient body that provides local authority services to the City of London and which has accumulated private powers and private resources that also fund other parts of the UK. Among its resources are three funds that it manages.

The £1.1 billion City fund is used to meet the cost of the City of London’s local authority duties, while the £1.3 billion City’s Cash fund – which the Corporation has built up over the last eight centuries – is an endowment fund, mainly made up of property assets, that finances a range of services for the benefit of the City, Greater London and the UK as a whole.

City’s Cash provides for all of the Lord Mayor’s activities, the maintenance of 10,000 acres of open space – including Epping Forest, Highgate Wood and Hampstead Heath – and it provides for Smithfield, Billingsgate and Leadenhall markets. It also funds and manages three independent schools and the Guildhall School of Music and Drama.

The Corporation is also sole trustee to the £800 million Bridge House Estates, a charity that primarily maintains five bridges across the Thames River – Tower Bridge, London Bridge, Southwark Bridge, Millennium Bridge and Blackfriars Bridge.

According to the trust’s website, the trust’s origins date back to the end of the 11th century when William Rufus, the second son of William the Conqueror, raised a tax to repair London Bridge. The bridge was later replaced by a stone version that housed shops and homes that generated enough taxes, rents and bequests to create a significant fund, which was administered from a building called Bridge House on the South Bank.

Today, Bridge House Estates donates surplus money to charities for the benefit of Greater London. It gave away £20 million in grants in 2013.